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Shares of Chinese electric vehicle firm Xpeng dropped on Wednesday after the company reported earnings that missed expectations and forecast a plunge in car sales.
Xpeng shares were down more than 5% in pre-market trade in the U.S.
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Here’s how the company did versus Refinitiv consensus estimates for the first quarter:
- Revenue: 4.03 billion Chinese yuan ($571.6 million) versus 5.19 billion yuan expected. That represents a 50% year-on-year plunge.
- Net loss: 2.34 billion billion yuan versus 1.9 billion expected. That was wider than the 1.7 billion yuan loss reported in the same quarter in 2022.
Xpeng forecast deliveries of its vehicles to be between 21,000 and 22,000 in the second quarter, representing a year-over-year decrease of between 36.1% to 39.0%.
The company also forecast revenue of between 4.5 billion yuan and 4.7 billion yuan in the second quarter, down between 36.8% and 39.5% year-on-year.
Xpeng has been hurt by a number of factors in its home market of China. The country abruptly scrapped its strict Covid-19 control measures in December. However, China’s economic recovery has been uneven with mixed data. That has weighed on consumer spending.
But the Guangzhou-headquartered company is also facing intense competition in electric vehicles from other startups like Li Auto and Nio as well as established players like Tesla and Warren Buffett-backed BYD.
Tesla has been cutting prices in China to spur demand which has also weighed on Xpeng’s competitiveness.
Xpeng delivered 18,230 cars in the first quarter, down by about 47% from the same period a year ago.
The company has been reorganizing its management structure and restructuring the company over the past few months in the hope of unlocking growth.
“During the first quarter of 2023, I took actions to make changes to our strategy, organizational structure and senior management team decisively,” He Xiaopeng, CEO of Xpeng, said in a statement.
“I am fully confident in taking our Company into a virtuous cycle driving product sales growth, team morale, customer satisfaction and brand reputation over the next few quarters.”
Xpeng is gearing up to launch its new sports utility vehicle this year called the G6 in a bid to revive sales and its brand image.
“As the upcoming G6 launch and other new product launches fuel rapid sales growth, we expect our cash flow from operations to improve significantly,” Xpeng’s Co-President Brian Gu said in a statement.